Itemization is basically one of my main obsessions in RPGs because it can make or break the entire progression curve and reward system, aside for being indirectly a vehicle for lore and narrative.
I have very strong opinions about how itemization should work in a RPG, especially in an open world, non-linear game, because too many games I loved were almost ruined by a poor loot and progression system (Divinity Original Sin 1 and 2 come to mind, or HELL, even The Witcher 3 itself).
In general there are things that I love, others that I hate. More than anything what I don't want is leveled gear.
ESPECIALLY when the same item is repeated in several tiers/levels with better stats (or worse: completely randomized ones). It doesn't make sense, it's not rewarding, it's immersion-breaking (constantly leading to nonsense like the end-game peashooter looted by a street thug that vastly outclasses a "top corporate weapon" looted in one of the early missions), etc, etc.
Even worse when this leveled gear is also GATED by level requirements.
For a start, as a very cornerstone of any loot system tied to a non-linear game, I think the gap in power between early-game gear and end-game "epic" stuff should never too wide. It's fine to get progressively strong loot to some extent, as long as it allows for a perceivable increase in firepower without overdoing it, but to put in clear numeric terms I don't think an end-game variation of a certain type of weapon should ever go above being five-six time more powerful than early game gear at most. Or to put it in other terms: ideally no battle should ever be "completely impossible" with a novice character (just very, VERY hard) and at the same time no low level enemy should ever become irrelevant to the point you can go AFK 5 minutes while under attack.
Just to pick a popular example of this, I think Dark Souls strikes a reasonable balance in these terms: you can get powerful enough to face end game bosses rather quickly if you know how to move, but at the same time even a couple of worthless zombies in Undead Burg can still kill rather quickly an endgame character that doesn't make any attempt to defend himself.
As a second step, each weapon should have a consistent identity: a specific model of gun should have the same stats every time you find it (bar special mods applied to it) no matter how far into the game.
Common items should be widely available and looted most of the times. Quality weapon distributed sparsely in the hands of enemies who are supposed to have them for a logic reason, and top gamma hardware should be rare and carefully placed.
Just because by the late game I'll be looking for some unique and powerful gun it doesn't mean I want to loot one at every corner of the street after shooting someone. I'm perfectly fine with looting (or even ignoring, after a while) vendor trash from the overwhelming majority of goons most of the times, because that specific time I'll find a rare or unique piece of gear it will feel SO MUCH more valuable.
What's even the point of adding "levels" to loot and characters, when then you are necessarily forced to keep escalating them across the entire game in a way that doesn't make any sense (see: mighty golem level 9 protecting an archmage tower, followed 20 hours later by angry farmers with pitchforks level 50)?
Aren't talents, perks and better gear more than enough to make you feel more powerful over time?
Hell, Breath of The Wild is an open world action adventure where you don't gain a single stat point across the entire game (except for health and stamina unlocked by shrines and STILL gear alone is more than enough to make you comically overpowered by the late game.
With these premise in mind I would love to see unique items that are remarkably more powerful than average (but also well hidden and/or hard to get). These unique weapons or piece of gears should be HAND-PLACED where it makes sense to find them and maybe even tied to a story somehow. They should never pop randomly in a loot table.
In fact, i'd be perfectly happy if there was no "loot table" at all and everything was hand-placed, but realistically I realize it may be too much to ask in a massive open world...So let's say it would be fine if the generic loot table would be composed almost entirely of just common or barely uncommon items, with rare, valuable and even unique ones added manually where they matter.
As a side note, I'd like to tell more and more developers one important thing: we really don't need to loot entire wagons of shit every two steps. It doesn't feel rewarding, it doesn't feel exciting. It's a pace-breaking mechanic, it's busywork that is made even more bothersome by the subsequent unavoidable issue of inventory management.
It doesn't even make you feel like you are constantly getting something new and exciting; if anything the opposite: it dulls the enjoyment of finding something useful, because you are constantly picking up things.
TW2 and 3 were dreadful in that sense. Let's put aside gear and consider just the common "crafting materials and junk" Why was I even looting broken rakes, piles of ashes and planks of wood?
Why "elven ruins unexplored for centuries" were filled of books about the last hot topics of Novigrad/Vizima politics?
Why peasants who couldn't feed their family had drawers filled with gems and rare and valuable alchemical reagents?
Random and overabundant placement of utility items never seem to do games any favor, frankly.
We also don't really need to replace our gear every 15 minutes. It's perfectly fine to find a good weapon and being able to stick to it even for several hours before finally finding a good replacement for it, much later into the game.
It's also nice to find items that are equally powerful alternate options of what you are using ("sidegrades", as the gaming community informally calls them) rather than constantly ramping up stats.
Dear developers, please learn the virtues of horizontal progression systems over vertical ones, and especially over "exponential" ones.
P.S. In the end I picked the 4th and 7th options, since they sound the closest one to my ideal system described above.